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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

Wednesday, September 17, 2008

What do you do when the CEO is only in it for the money?

As I noted in last week's blog entry, I believe the problem of self interested CEOs is significant. However, for many I suggest that this is kept in check by their commitment to the mission. Today I want to talk about that minority who do not have any real compunction to hold back their greed. They are the ones you end up hearing about on the news. Invariably, when CEO personal gain becomes central, unethical abuses of power go hand in hand with it. In those cases, personal greed has risen to such heights that their agency or government regulators are forced to take action to get rid of them. What can you do if you observe such a CEO?

If you are a staff person, I refer you to the advice I gave in my suggested rules for public charity work (part 1 and part 2). The bottom line is this: unless there is a whistle blower policy at the agency that you think can truly protect you (have an attorney check it out), find a new job! The reason I recommend an attorney is because the laws in each state vary as to what is covered and federal whistle blower laws are quite narrow in focus. If you can not afford an attorney to do the review of the policy, find a new job! Once you get that new job, I urge you to report the abuses of authority.

I also noted last week that the CEO has tremendous influence. Unless you are truly protected while you are working at an agency, a self centered CEO can squash you like a bug! The Board may be taken in by the lies of the CEO and will rally around him or her, rather than dealing with the problem. However, a whistle blower policy may force even a reticent Board to consider the allegations you bring forward.

Assuming the agency does have a good whistle blower policy; write up the facts of what you have observed. If possible, have that same attorney who reviewed the policy review your document before you send it in. Also, if you have others who can corroborate your facts, encourage them to come forward as well. Submit the information to the designated person, per the agency policy. Then wait. If the agency is good to its word and you have identified real abuses by the CEO, the results should be positive. However, it is quite likely that the process will be long, expensive and painful to all involved. You may have to endure multiple interviews covering the same ground and shunning or harassment (report this immediately too!) by those who are allied to the CEO. On the other hand, if the CEO is truly bad, it is likely that you will have opened the floodgates and others will soon follow your lead. Hopefully they can be your support group as you go through the ravages of the process. Have your attorney get involved if the policy is not being followed.

If you are a donor or a person who receives services from the agency, you should follow the same procedure that the staff follows. Write up the facts and forward them to the person responsible for investigating the matter. If you are a donor, you usually do not have to worry about the kind of problems I described above. However, if you are a client of the agency, such worries may be even greater. You may not have the luxury of being able to find another place to receive services. Furthermore, the smaller the agency, the scarier this process can be as it is often easy to figure out who made the allegation. So proceed with great caution. Perhaps you can find a staff person you trust to take the matter to the next level.

If you are a Board member of the agency and you receive reports of unethical CEO behavior, you have a responsibility to act. It is likely that you will be shocked and find the allegations hard to believe. A CEO like this can often give the appearance of being a caring, super star. However, you need to take the allegations seriously and follow your whistle blower policy to the letter. If you do, the facts will usually come out quickly and you will find out if the super star is a giver or a taker.

In conclusion, I have seen this kind of situation in action up close. I think the analogy of a serious illness fits well with what an agency goes through in this process. You are the antidote to the disease. However, wrenching pain and suffering occur as the healing process begins. Exhaustion follows as the disease (bad CEO) finally leaves and rebuilding begins. Hopefully the agency can return to full health quickly, but sometimes the healing process can take years. Regardless, in the long run it is critical for the charity to go through all of this if it is going to truly meet its mission once again. You have my deepest respect, if you act to address the problem.